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Housing supply improves as the market starts to slow

Sales activity remains strong across the housing sector, but there are signs that the market is starting to slow to more moderate levels as more properties come on to the market.

With the housing market booming, some vendors previously felt that they might run the risk of selling too quickly before finding somewhere to buy, but these concerns have now eased slightly and more are willing to come to the market. This is according to Ian Marriott, head of Savills Nottingham.

His comments come following the release of the May 2022 OnTheMarket (OTM) Property Sentiment Index this morning.

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The report found that while the high levels of buyer and seller confidence in April are consistent with the previous two months, there is also strong evidence emerging of a more stable housing market.

“The frenzy of the past two years has settled into a more manageable, steady environment, a ‘new normal’ or elevated version of the pre-pandemic market,” said Jason Tebb, chief executive officer of OTM, “There are several headwinds, including the rising cost-of-living and the potential for further interest rate rises from the Bank of England; however, these factors have yet to impact sentiment.”

OTM reports that the number of properties newly listed for sale is slowly increasing and supply-demand economics suggest that if this continues, price growth will moderate.

Tebb commented: “If there’s more choice of properties for sale and buyer numbers remain consistent, or even start to drop off, there could be a levelling off in activity and prices. However, the fundamental lack of stock at the present moment means that values will hold at a certain level.”

While there may be further challenges to come, for now OTM’s data shows strong confidence from both buyers and sellers, which is continuing to fuel the UK housing market.

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Tebb continued: “There are many reasons why people need to move and there are plenty looking to do so. This is particularly true in the regions outside the major conurbations as they look their best right now with spring leaves on the trees – one of the reasons why spring/summertime is a natural time to sell. The challenges of the past two years have ingrained a sense of positivity in the housing market which shows no signs of slowing and as such continues to thrive as serious property seekers get on with the business of moving.”

OTM data reveals that in April, 82% of sellers were confident that they could complete a sale within three months, which is the same percentage as in March and February 2022, with some regions even reporting an uptick in confidence.

Sellers confident that they would sell their home within the next three months rose to 82% in April in the East Midlands, compared with 75% in March.

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Seller confidence also rose to 83% in the East of England, up from 81% the previous month. London saw a slight drop-off, with the percentage of sellers confident they’d sell their property in the next 3 months falling from 86% in March to 82% in April, bringing it more in line with other parts of the country.

“Strong demand from serious buyers remains, with our data showing that in April, 63% of properties in the UK were SSTC within 30 days of first being advertised for sale,” Tebb said. “Again, behind this national average there are differences which reflect the diversity of regional markets; for example, 50% of properties were SSTC within 30 days of first being listed in London, compared with 79% of newly listed properties in Scotland.”

Source: Property Industry Eye

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The government fails to meet housing target

A select committee has warned that the government has failed to meet its target for releasing land for new homes by  “a wide margin”.

Under its Public Land for Housing Programme, the government aims to “increase housing supply by releasing surplus public sector land for at least 160,000 homes” in England between 2015 and 2020.

The Public Accounts Committee however argued in their latest report that by the end of the programme, the government will have failed to sell the land needed for 91,000 of the homes promised.

This is equivalent to 57% of the overall target.

Meg Hillier MP, the chair of the committee, said: “The nation’s housing crisis has been prolonged by the government’s failure to develop a strategy for public land disposal. We are frustrated that this unique opportunity has been wasted.

“The UK needs more houses. As a major land holder, the government is in a unique position to release land for new homes; and yet the objectives of its land disposal programmes are chaotic and confused.

“We are baffled that the programmes were not designed with a view to how many homes were needed of what type, and where – nor how the proceeds will be used.

“Land disposal targets were set without a rigorous evidence base of what could actually be delivered. It is no real surprise, then, that the government will now fail to meet its target to sell enough land by 2020 for 160,000 homes.

“But with a gap of 91,000 fewer potential homes than anticipated, we are extremely concerned that the nation’s housing shortage will only get worse.

“Building affordable homes should be a key part of the objectives of the government’s land disposal strategy. However, we are concerned at the Department’s disregard for how the release of public land could be used to deliver affordable homes, particularly social homes for rent.

“We call on the government to set out a decisive course of action for how it will execute its land disposal strategy so that it translates into actual homes for the people that need them most.”

The select committee said this target was ‘clearly unrealistic’ from the outset and lacked a sufficient and rigorous evidence base when it was originally set.

The Cabinet office is expected to achieve its proceeds target of delivering “£5bn of receipts between 2015 and 2020 through the release of surplus public sector land and property across the UK.

This is despite almost all departments being on course to miss their individual targets.

However, this is because of one large unplanned sale that contributed almost £1.5bn of the £5bn target.

The committee said it is unacceptable for the outcomes of these crucial programmes to be reliant upon luck instead of judgement.

It said that despite just 40,500 homes having been built since 2011, the loose definition from the ministry of housing, communities and local government (MHCLG) of what constitutes a new home has artificially inflated the number of new homes that have been created.

A spokesperson from MHCLG added: “We have an urgent mission to build more homes for the next generation so they can realise the dream of home ownership.

“Last year saw us deliver 222,000 new homes, more than in all but one of the last 31 years.

“Government departments have identified enough surplus public sector land for 160,000 new homes and our development accelerator Homes England is providing expert assistance to get these built more quickly.”

By Michael Lloyd

Source: Mortgage Introducer